A Report Made 'subject To' Condition On Grid Should Be 'as Is' C5 Or In The Condition After Repairs?

[CANative]

What's wrong with that? I can understand the re existing from what the repairs are to be.

 

[Deleted member 134708]

No clue. I do it the way the guy who is about to be in serious trouble's way. And if needed more room.

Subject to xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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Subject to continued from page 2 of URAR: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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What I wouldn't do is talk about all this as-is condition, yet as-repaired is this, but this part is as-is, but this part isn't in an addendum.

I would appraise hypothetical and in the tiny 2 lines for subject to, write what it is subject to. If I need more space, page 3 it goes.

An addendum talking about as-is, is redundancy. MY serious troubled friend and I will continue to be law breakers.

 

[Webbed Feet]

OP: "Note the lender/client provided appraiser with an estimate from a general contractor, (extensive list), for a total of $81,000 (which this appraisal report is relying on for 'cost estimates' for these repairs)"

Mista Feet, perhaps some New seeing eye dogs can provide assistance, I do Not see where an estimated Cost of Repairs of $81,000 is a minor repair ?

"Remodeling" and "Repair" are two different things. Clearly, from the description, the property isn't just being repaired. What's at question is not cost, but what the market indicates the affect on value will hypothetically be as of the effective date of valuation. The only way any estimate of costs of anything matters would be if the Scope of Work required valuation of the property in its current condition and like condition comparable were unavailable. Even then, "costs," in the form of contractor bids, are only a part of an analysis. Hypothetically, all of the described items would already be completed, hence whatever "cost" it took to do so would no longer be relevant. $1 or $50 million dollars in "costs," resulting in the subject's hypothetical final condition, would have no affect on what the comparable properties sold for.

 

[J Grant]

In these type of assignments, clients generally do ask for a cost estimate of repair /remodel/ (or upgrades).

The adjustment, if any, for it between comps should be based on market reaction, which can differ than cost.

However, the cost is useful in that informed buyers would correlate a relation of cost vs value in price...if a buyer sees the only difference between 2 houses is a new roof, it is not that hard for a buyer to get some idea what a roof like that costs. Buyers often, for many reasons, pay far more than cost, but at some threshold they won't typically won't pay $X over.

If a roof for that size/quality costs 20-25k, for example, an adjustment of either 50k , or 5k, might be hard to support. (unless it's a wacky market, in which case that needs explaining)

 

[Alvin Rules]

Q: I selected (subject to completion, etc) on new construction, I'm being asked to select an additional "subject to" option in the final reconciliation. I've done proposed construction before and not been asked this. The SFR I'm appraising is 90% complete and I describe the property in my report as "new construction, and under construction" is that my mistake. Should my language have been as if the subject was complete????

 

[Slappy]

I think the "appraisal" staff at the AMC has a guideline that if the appraiser states the property as C5, he/she must estimate a "cost to cure" to get to C4 rating. That makes sense if you have a few items which need repair. I had a hot mess of a property which I generously gave a C5 rating. After inspection, I sent the pics to the lender and explained the situation. I expected them to cancel out of the deal. They came back with the "cost to cure" solution. It was a big waste of time as this was not a property that could be conventionally funded. Now, I try to get past the "appraisal" staff and ask for the chief appraiser/ review appraiser.

 

[Tom D]

I have an urgent question that needs to be answered by senior appraiser's on this Forum. Thanks in advance for your insight, and replies.

The lender is asking me for revision, and further explanation on this report:
"Since the subject is being appraised “subject to” please reflect what the subject’s condition rating would be after the needed repairs have been completed in the market grid with an after improved appraised value (instead of the condition that the subject is in currently). "

Should the condition on the 1004 grid and in the market approach addendum for the subject show the current 'as is' C5 condition or should it reflect the after repaired condition of possibly C3 or C4, however the appraiser would have to inspect the completed work to see the extent and overall condition of the subject has changed significantly to raise it beyond a C3. I just don't think its wise to provide an after repaired condition since as the appraiser I'm not sure what it will eventually be, without seeing the quality of the renovation/updating being performed. Should I comply with their request for an after improved appraised value, (instead of the 'as is' condition the subject is currently in)?

Vic, there was quite a bit of discussion of your situation, hypothetical condition, in the recent USPAP, maybe see opinion advisory. the lender is correct. also, you can't tell the quality of materials from the specs? good for you to ask these questions here, however i fear you may not have the knowledge to have avoided this mistake. The lender could send your 'as is report' in, and i can only see you being in trouble with the state. the current photos will show the current condition, the attached cost & specs, to repair, will describe what needs to be done. you just need to decide if it's a c3 or c2 condition for the current 'hypothetical' report. the lender will do a 1004d to verifiy the finished condition & quality which will probable involve you.

 

[mp2277]

Agreed and before anyone gets their panties twisted, Yes he means Cost to Cure......

i would state the repaired condition throughout the report and include a statement as to current condition, so I guess I agree with most on here